Work – The talent exodus – how do we remedy it?

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Work – The talent exodus – how do we remedy it?

Wednesday 20 July 2016

As London begins to come to terms with the fallout from Brexit, how can the city ensure it retains the best talent? A Think Tank organised last month by NLA as part of its build up to an exhibition and season of events on Work this autumn sought to find out.

A Think Tank organised last week by NLA as part of its build up to an exhibition and season of events on Work this autumn sought to find out.

Cushman & Wakefield UK and Ireland chairman Digby Flower kicked off by saying that London has ‘adapted, endured and come through’ after similarly seismic events as the referendum in the past, citing the Big Bang, dotcom crisis of 2001 and global financial crisis of 2008. The only change this time is that we voted for the situation, said Flower, but the two big matters arising are passporting andthe free movement of people.. Flower’s soundings with senior people at the major banks such as Goldman Sachs have told him they don’t see it conceivable that the City won’t continue to thrive, but there will have to be an element of the free movement of people. ‘It’s only a question of how and the hiatus we go through to get there’, said Flower. Given today’s lower vacancy rates than during the previous crises, the impact will be much less severe on the market this time around – it just needs ‘calm, sensible conduct’ and a sense of direction from politicians.

But the affordability of London is still a major concern, said Flower, with a trend emerging of occupiers north shoring and offshoring - taking functions and staff out of the City. This has moved from the financial sector to the legal, with firms like Citibank going from 1.7msqft in Canary Wharf to 1m, north shoring to Belfast, Glasgow, and moved other functions to Budapest. RBS, too, is moving people to cheaper locations, while every law firm is wanting 20-30% less space than they did 10 years ago in London, moving staff on support and ‘repetitive law functions’ to cities like Belfast, Glasgow and Manchester. Why are they doing this? Essentially to achieve reduced employment and property costs and to get greater resilience through diversity, something which is highlighted by data on comparative cities across the UK and wider world. What this data doesn’t show, however, is that densities have gone from 1:12 in London to around 1:8: even if the real density of occupation compared to actual needs more research.

Kevin Chapman, UK head of offices at Lendlease, said that the strength of London as a metropolitan centre is unrivalled and will continue, with the view from down under being one of unwavering confidence. But a big social change is arising from Brexit, which will be important, he said, with workforces becoming more discerning about where they work. ‘(They) will have more of an opinion and people will be more vocal about what they want’, said Chapman. ‘We have to listen to what they’re saying and give them environments to work in and environments to live in in London.’ The appeal of Europe or beyond, after all, is a real threat when the affordability picture gets too difficult.

And yet, said Charlie Green, The Office Group has seen enquiries up 25 per cent since before the referendum on a day-to-day snapshot comparison. The corporate world is fine, but for Green’s company, it is all about the smaller businesses and how they are working. ‘They have to be able to afford it. If they don’t, they will go’, said Green. The sharing of space means that people are sharing costs, said Green, but the real estate industry has been too rigid in dictating how buildings are provided, developed, funded and leased. The empowerment of the occupier is forcing the industry to engage with them to create spaces that are more affordable and commercially successful too, he added. And it is the business model of co-working – which allows it to let every desk position twice over - that allows it to work. But today it is much more like the hospitality sector, he added, with events, an app and community managers.

In Westminster, said Barry Smith, head of city policy and strategy, policy, performance and communications, the authority is focusing on the north of the borough to try and get firms to take space. But it was important to think about work not only happening in offices. ‘Work is a thing you do, not a place you go’, he said. And Oliver Ripper,Development Executive at Helical Bar, said that increasingly, another shift is that buildings are being seen less as a cost and more as a value generator, with the chief executive now being the one making the location decisions, not those from the cost side of the business. John Robertson Architects has not been deterred by growing rents in its office area in Southwark, with that cost being ‘peanuts’ compared to salaries, said the practice’s director, John Robertson. Deloitte’s move into One New Street Square, moreover, had shown Deloitte Real Estate director Jeremy Castle what larger businesses might also need in the future, in space planning terms. This was essentially about attracting and retaining talent from the graduate market by stimulating connections internally and enabling better interactions between its staff. But in the background, housing is another issue – Deloitte has a deal with East Village to give its graduates a help when they first arrive in the scheme’s rented accommodation.

Flower believes that Cushman & Wakefield might be down to around 60% of its 2,000 staff in 10 years, with many elements being subcontracted out more in future, and staff will be more ‘multiskilled’. But Workplace Transformation Consultant Despina Katsikakis said the bigger shift more generally may be that from full-time employees to contract employment. All of the large corporates she works with are looking into this, but also at changing their perceptions as organizations from being the ‘closed fortresses’ of the past to being ‘open networks’. ‘That changes dramatically the way they approach space’, she said. Such ‘Open source’ organisations tend to attract talent through offering choice, flexibility, allowing staff to have a say and feel they are connecting to knowledge and community in the places in which they work. And this might not just mean accommodating people in buildings where they share central amenities to support their work but also might mean more distributed neighbourhood work centres. So in the centre the buildings might need to become more permeable and have more amenities. But, asked Katsikakis, what is the planning that needs to be done to create real, vibrant communities across London to support a real flexible workplace, which uses the city as the workplace? The industry gets ‘bogged down’ with looking at cost, said Katsikakis, when the issue should be reframed as reducing wastage and then increasing engagement, trust and innovation. If you increase productivity by half an hour a day, for example, because you’re increasing spaces in which you can concentrate or chill out, said Katsikakis, that has a much more significant value than how many square feet you might be driving out of the equation. So a new metric needs to be devised to evaluate real estate, away from absolute space value to business process value. For example, a study she did with one firm on allowing staff to work from home or neighbourhood centres for one day a week showed it could save £10 million per year. But this impact shot up to £285m of productive time saved when commuter time, average salary and average head count were factored in. Not to mention the benefits of enabling trust, reducing absenteeism, improving work life balance and the benefit it brought to the local communities.

Neither are traditional FM teams built for the way that offices have become more part of the hospitality sector, said BDP associate Nigel Coutts. ‘What needs to change is much more of a customer-led process’, he said. Attracting the right talent into office space requires an ability to respond rather than a ‘begrudging person at the end of a telephone’; a team of responsive people where staff can quickly gain access to, say, video teleconferencing. And the gyms and cafes need to also be as good as those people expect from hotels, he added.

London has always been seen over the last 20-30 years as a drain on the rest of the UK, said Orms director John McRae. But what is fascinating now is that where it was the main hub, talent generation can help businesses outside of the centre. ‘Maybe it is now the chance for London to re-engage with the rest of the UK and lead the rest of the UK’, said McRae. ‘We could reenergize things. Why is London not a catalyst? If people want to live in Manchester, accept it. London will still survive.’

We are seeing several cultural shifts influencing workplace. The first is our perception of ownership, said Steve Henigan, Principal for Workplace Consultancy, Perkins + Will, where people today don’t see home ownership as such a major concern, due to both affordability the flexibility that renting offers, similar to co-working environments. The second is the advancement of mobile technology, where corporates expect people to be switched on, 24-7. ‘Where we’ve not been responsible as employers is in giving something back’, he said – could employers (and buildings) be more flexible?

Some employers are realizing that their staff want an experience, however, said Kevin Chapman. ‘Email is dead. We’re looking at alternatives. It’s ruining people’s lives, so what comes next?’ It won’t be long before the server is shut off at the weekends – indeed, some are already doing that, said Katsikakis. ‘Those that succeed will be those that can provide an experience of work that is tailored to the worker’, said Chapman. ‘And if you can crack that, you will win.’

Indeed, new metrics such as the WELL Building Standard are creating a framework to bring together the head of HR and head of corporate real estate to jointly make decisions, added Katsikakis. 'We need to move away from focusing on the hardware of buildings; desks, partitions and technical spec checklist and focus more on the software; the cultural and social value of buildings to organisations and the services that support people’s life at work - and helping them feel better and be more productive.'